Solar Development

“I have known Roy Phillips, founder of REP Energy, Inc., for over eight years. Roy demonstrates a consistent and excellent knowledge of the solar and construction industries, and always operates with integrity and quality on every project.”

News on Wind Energy

May 9, 2015, by Paul GipeMay 30th Danish wind pioneers are gathering at the Tvind school in northwest Jutland to celebrate the 40th anniversary of the start of construction for the world’s oldest operating wind turbine–Tvindkraft.[more]

News on Nuclear & Renewable Energy Policy

May 17, 2015, by Karl-Friedrich LenzIt would work exactly like the successful solar tariff, with one small change. There would be a cap on the fossil fuel electricity bought under the system. That cap would be calculated from the already existing goals for renewable. Look at the renewable goal, subtract that from 100 percent, and you get the cap for fossil fuel under the feed-in tariff.

May 8, 2015, by Alan SimpsonFormer parliamentarian Alan Simpson bemoans the paucity of serious debates of public paucity in the recent British election concluded today. Beginning in Churchillian tones, he laments “What infuriated me most about this general election was that never has so much been missed by so many.”[more]

April 30, 2015, by Craig MorrisSo the auction has just resulted in a large group of losers, a higher price than with feed-in tariffs, and a two-year postponement of the roughly 150 megawatts just awarded.

April 29, 2015, by Craig MorrisIn a nutshell, the UK overpays wind power in particular because big utilities with big expectations for returns run the show, whereas new players and communities have largely driven the German wind sector up to now – and they were more interested in getting the transition moving than in increasing their personal profits.

News on Feed-in Tariffs

May 18, 2015, by Voice of America”There’s nothing that can make up for a feed-in tariff that’s in the single digits,” said Daniel Potash, chief of party at the Private Financing Advisory Network for Asia program, under the U.S. Agency for International Development.

May 16, 2015, by Chetan ChauhanGermany was one of the first countries to allow grid-connected solar rooftops by the way of feed in tariff, which meant that people got more money for the green power they generated than the power they consumed.

May 12, 2015,Under the current setup, companies with end consumers make a monthly contribution towards the feed-in tariff which is set in US dollars and paid in Turkish lira at the exchange rate on the day of settlement.

May 11, 2015, by Craig MorrisHere, we see that the price of a completely installed solar array has been and continues to be considerably cheaper in Germany than in the US. The gap seems to have been around two dollars all along. Now that the price in Germany has fallen to two dollars, solar is now twice as expensive in the US as it is in Germany.

May 11, 2015,They spoke at a seminar styled ‘Feed-in Tariff (FIT) regulations: promotion and development of renewable energy in Bangladesh’, co-organised by the Dhaka University’s Institute of Energy, The Asia Foundation and Australian Aid.

May 7, 2015,The ‘Removal of Barriers to Energy Efficiency and Conservation in Buildings in Mauritius’ project is a United Nations Development Programme (UNDP)-implemented, Global Environment Facility (GEF)-financed project . . . Feed-in-Tariff for small scale producers of electricity and the setting up of the EEMO.

May 7, 2015, by Verity RatcliffeCairo has therefore decided to introduce feed-in tariffs for renewable energy projects. Under the new system, private companies will receive a fixed tariff for the power they produce from renewable resources.

May 4, 2015, by Piotr MrowiecWhile the EU countries are witnessing a retreat from feed-in tariffs, Poland is for the first time in history introducing feed-in tariffs to support its renewable energy sector.

April 30, 2015, by Karl-Friedrich LenzSo I noted with interest the failure of the first test case for the auction model. The auction price turned out to be above what the current feed-in tariff is, as this article at PV Magazine explains. Those first 154.97 MW will be built at €0.917per kWh, which is higher than the current €0.0902 of the feed-in tariff.

News on Electric Vehicles

May 13, 2015, by Paul GipeAs part of our continuing exploration of the Nissan Leaf’s range, we took a one-day get-a-way and drove up to scenic Kernville deep in the heart of the southern Sierra Nevada.[more]

May 12, 2015, by Paul GipeWe had about a dozen cars, so there’s a dozen drivers there. Leafs, MiEV, two BMWi3s, a Ford, Rav 4, and a Tesla. There was quite a line up of vehicles–the Tesla attracting the most attention naturally.[more]

News on Community Power

May 18, 2015, by Craig MorrisThis month, construction of the Beinn Ghrideag wind farm was completed. In the next few months, three 3 MW Enercon wind turbines are expected to start power production. A comparison with a recent German committee project is illustrative.

May 11, 2015, by Craig MorrisA few weeks ago, 360 German citizens completed and 82.3 MW wind farm consisting of 24 wind turbines. The project even included a transformer station, which the community project financed completely on its own.

March 18, 2015,In Germany, citizen cooperatives have long been investing in the production of renewable energies and some are now looking at how to buy back the energy grid from the energy companies. They failed to do so in Berlin, but have succeeded in Hamburg, creating a new business model that many other countries would like to emulate.

Marin Clean Energy officials are highlighting the joint power authority’s efforts to stimulate the creation of local renewable energy projects and local jobs as the authority celebrates its fifth year and the opening of its new San Rafael headquarters.

“Survival of the agency is no longer at issue,” said Marin County Supervisor Damon Connolly, a Marin Clean Energy board member. “The debate has changed; now it’s about continuing to meet goals and benchmarks that we set for ourselves.”

Marin Clean Energy is the first successful attempt in California to launch a new, public model for providing electricity to residents. It was founded to jump-start the use of renewable energy sources by stimulating demand; it offers customers the opportunity to buy electricity that is supplied by 50 to 100 percent renewable sources. It competes with Pacific Gas and Electric Co. as a retailer of electricity, but PG&E continues to maintain power lines and other electrical power infrastructure.

Marin Clean Energy serves about 137,500 customers in Marin County, the city of Richmond and the unincorporated areas of Napa County. It is adding the cities of San Pablo, Benicia and El Cerrito and expects to have a total of about 165,000 members by the end of this month.

Marin Supervisor Kate Sears, who heads Marin Clean Energy’s board of directors, said “we are extremely proud to announce that 10 new local projects will be providing service for our customers.”

Sears said that since Marin Clean Energy began serving customers it has generated more than 2,400 California jobs. She said Marin Clean Energy’s new solar projects will create more than 750,000 union work hours in just 12 months.

Rep. Jared Huffman, D-San Rafael, said, “I’m especially excited about the new clean energy production that is now under construction here locally. That has always been one of the better parts of the promise of Marin Clean Energy, and it’s happening now.”

The agency has its naysayers, however. Jim Phelps of Novato, who has worked as a consultant to the electric and petrochemical industries, and the International Brotherhood of Electrical Workers Local 1245, which represents PG&E’s electrical workers, have hammered MCE for its use of renewable energy certificates, typically referred to as RECs. RECs are tradable commodities that certify that 1 megawatt-hour of electricity has been generated from an eligible renewable energy resource.

Critics of the use of RECs assert that they are priced too low to effectively stimulate the creation of new, renewable energy production. Marin Clean Energy and others who use RECs acknowledge their shortcomings but say they are currently the only game in town.

Projects announced Thursday will produce about 63,000 megawatt hours per year, sufficient energy to meet the average electricity consumption of about 10,400 Marin Clean Energy residential customers, said Jamie Tuckey, a Marin Clean Energy spokeswoman.

In most cases, Marin Clean Energy has encouraged development of the projects by agreeing to purchase a certain amount of electricity at a specified price over the next 20 to 25 years. The largest project, 30,000 megawatt hours per year, is being financed by Waste Management and will convert landfill gas at Redwood Landfill in Novato to energy. The project is scheduled to begin generating energy this year and the contract is for 20 years.

The second-largest project, 19,800 megawatt hours per year, is slated to go online this year on land in Richmond that Marin Clean Energy will lease from Chevron. Marin Clean Energy is investing $125,000 from its local renewable development fund to help cover predevelopment costs for this project. Marin Clean Energy has an agreement to purchase the project from developer Stion in its seventh year.

Four of the projects will be in Novato, and one will be in Larkspur. The Larkspur project, 600 megawatt hours per year, will be a rooftop solar project.

Connolly said that since Marin Clean Energy began serving customers it has doubled the amount of renewable energy purchased for homes and businesses in its region, reduced greenhouse emissions by 59,421 tons, sourced green power from more than 30 California suppliers and saved customers more than $5.9 million in energy supply costs last year alone.

Marin Clean Energy, which has 23 full-time employees, celebrated its service anniversary with a party at its new headquarters at 1125 Tamalpais Ave. in San Rafael. It has moved from a 2,188-square-foot space to offices with 10,710 square feet. The meeting room in the new headquarters is named after former Marin County Supervisor Charles McGlashan, one of Marin Clean Energy’s founders who died of a sudden heart attack in 2011.

Connolly said Marin Clean Energy would not exist today if not for McGlashan’s “passionate dedication and leadership.”

Roy Phillips, president of REP Energy, leads a tour of an abandoned quarry on June 9 in Novato. His company, REP Energy, wants to build a solar energy facility at the site near the McIsaac Dairy west of Novato. The quarry, no longer in use, was mined for the mineral serpentine, a source of asbestos. (Frankie Frost — Marin Independent Journal)

A proposed solar facility just outside Novato that could generate enough electricity to power more than 500 Marin homes is up for approval at the Marin Planning Commission meeting Monday.

Located on the isolated grounds of a former rock quarry, the solar farm would have 4,272 solar panels up to 6 and a half feet high on 11.5 acres of the 952-acre quarry. The $6 million project would generate 1.98 megawatts of electricity, delivered to Marin Clean Energy via nearby power lines.

The quarry was once mined for serpentine rock, which contains asbestos. Quarry operations shut down in 1990.

Installations like the solar project “are a good way to use formerly disturbed locations” like the quarry, said Andrew Campbell, the executive director of the Energy Institute at Haas, a research and teaching facility at the University of California at Berkeley.

Campbell said the proposed location also was beneficial because it is close to the people who would use the energy.

“Having the generation close to an area where consumers are also has benefits, since some power is lost when it is transmitted over long distances,” the executive director said.

The site is west of the city of Novato, east of Stafford Lake and about a mile north of Novato Boulevard. It is not visible from the road. County staff has recommended that the permit be granted, with some qualifications.

Crawford Cooley and Beverly Potter, who own the former quarry, would lease the land to San Rafael-based Danlin Solar, along with San Rafael-based REP Energy. Those two companies would own and build the solar installation.

“That’s a pretty typical arrangement,” Campbell said.

“Solar is a green energy source, no doubt about it. There is no pollution or greenhouse gas emitted at the place where you are generating the power,” the executive director said.

“This would be quite a win if it happened. The people who are very concerned about seeing beautiful agricultural land taken up with solar panels have a valid point. You’d hate to lose a lot of natural Marin. That makes this an ideal project because it’s sitting in an abandoned quarry essentially on bare rock,” said Bob Spofford, vice president of Sustainable San Rafael.

“Solar is in some ways the most ideal of all alternative energy because it doesn’t make noise, it doesn’t pollute, it produces power close to the time when it’s most needed, and it does not harm wildlife,” said Spofford.

Addressing Spofford’s last point, “Photovoltaic panels definitely do not kill birds,” said Michael D. McGehee, a Stanford University associate professor and a senior fellow at the university’s Precourt Institute for Energy. McGehee teaches classes on solar cells. Wind turbines such as the ones at Altamont do pose a danger to avian life, perhaps causing some to confuse the effects of this alternative energy source with those of solar, McGehee said.

No letters of opposition to the project had been received by the staff by Friday.

The state Office of Mines Reclamation and the Department of Public works oversaw the reclamation of the land since the 1990s, according to the county staff report. The project is exempt from the California Environmental Quality Act because it will not cause environmental impacts, the staff report said.

“My job is to work with clients to help them avoid environmental impacts,” said Dana Riggs, a project biologist with San Rafael-based WRA Environmental Consultants. “We planned it (the project) in a manner to avoid impacts on sensitive resources including species and habitat,” Riggs said.

If the permit is granted, construction could begin as early as mid-August and wrap up by November, according to Frank Gobar of Danlin Solar.

Los Angeles has long been something of a solar underperformer, given its size and sunny clime. The group Environment California reported that as of late 2011, despite being nearly three times larger than San Diego, LA had less installed solar capacity (37 megawatts to 36 MW) and fewer installations (4,507 to 4,018) than its neighbor to the south. And a 2011 UCLA study found that the Los Angeles Department of Water and Power was generating less than one-sixth as much solar power per customer as state leader Southern California Edison.

A feed-in tariff has been the major tool for Germany in becoming the world’s solar leader. A FIT works by guaranteeing solar power producers a profitable price for the electricity their systems produce. In LA, the Department of Water and Power will offer 17-cent-per-kilowatt-hour contracts for projects at least 30-kilowatts in size (the equivalent of about six typical home rootftop systems), up to a total of 20 megawatts of new installed power every six month.

The program could become even larger in the near future; DWP said in in March it will entertain a lant to add another 50 megawatts to the FIT.

In addition to clean-sourced electricity, advocates say the FIT will be a jobs creator for LA.

“The full 150-megawatt program will be a major economic driver for Los Angeles, creating 4,500 jobs and generating a half-billion dollars in economic activity at full scale, while also eliminating 2.25 million tons of carbon dioxide emissions by 2016,” the DWP said.

Still, as admirable as these moves by LA are, the city has a long way to go in making solar a significant part of its power equation. As Southern California clean-energy blogger Chris Clarke noted, “LADWP can deliver around 7,200 megawatts of power to its customers, meaning that a 100-megawatt FiT, when fully subscribed, will account for less than 1.4 percent of the utility’s generating capacity.”

The adoption of U.S. utility-scale photovoltaic (PV) and concentrating solar power (CSP) plants is expected to accelerate during the next decade, according to research from Frost & Sullivan. This will move the technology forward as a contender in a pool of conventional forms of electricity generation.

Renewable portfolio standards, federal incentives such as investment tax credits and loan programs are driving large-scale commercialization of solar energy. As solar energy competes with conventional forms of electricity generation, the potential market for utility-scale solar power plants in the country is on the rise.

Cumulative PV solar installations in the U.S. reached 1,855 MW with the utility-scale segment accounting for 32.2 percent.

Zpryme’s Smart Grid Insights and FierceSmartGrid are conducting a survey to assess the current sentiment and outlook for the Smart Grid industry on a monthly basis. We would like to invite utility, energy, and Smart Grid executives to participate in this month’s survey. Click here to take the survey.

“Though no new CSP plants were installed in the United States during 2011, projects totaling more than 1.4 gigawatts were under construction,” said Frost & Sullivan Senior Industry Analyst Georgina Benedetti, which should speed up overall market growth.

However, before banks and investors fund these projects, they need some level of assurance that a power plant will operate long enough to see a return on their investment.

“Therefore, well-established project developers using proven technologies will have an advantage in obtaining financing,” said Benedetti.

In 2003, Ontario’s government made a decision to stop burning coal. Since that time, Ontario has cut its use of coal by nearly 90 percent, and more than 80 percent of its power generation comes from water, nuclear, and renewables.

Lambton generating station

The last of Ontario’s coal plant operations will cease by the end of 2013 — a year earlier than originally planned. In 2014, Ontario’s use of coal is expected to be less than 1 percent of total electricity generation — down from 25 percent in 2003.

Ontario’s two largest coal-fired electricity plants, Nanticoke and Lambton, will close early as a result of the province’s improved electricity grid, increased efficiency, strong conservation efforts, and diversified supply of clean energy — effectively shutting down 17 of the Province’s 19 coal plants.

Zpryme’s Smart Grid Insights and FierceSmartGrid are conducting a survey to assess the current sentiment and outlook for the Smart Grid industry on a monthly basis. We would like to invite utility, energy, and Smart Grid executives to participate in this month’s survey. Click here to take the survey.

Ontario currently uses less coal-fired generation in its energy mix than any G8 nation and has been none the worse for wear. Clean energy and a modern electricity system have created tens of thousands of jobs and attracted investors and a high-quality workforce. In 2012, the renewable energy sector saw $12 billion in capital investment.

In fact, in 2011, Ontario was the world’s leading region for renewable energy projects, according to the Financial Times’ fDi Intelligence think-tank.

By the end of 2014, Ontario will be one of the few places in the world to eliminate coal as a source of electricity production.

Germany has 20 Times More Solar per Capita than the USA: Italy 14 Times More

Denmark has Nearly 5 Times More Wind per Capita than the USA

Australian Solar PV Development has caught up with that in California

Ontario Rivals California in Solar per Capita

In his stirring acceptance speech, re-elected President Barack Obama noted that climate change would be on the agenda in his second administration–despite its marked absence during the campaign.

Obama then tried to unify a divided country by closing with a popular American rallying cry of how the US “is the greatest nation on earth” and our best days as a nation are yet to come.

Considering the resounding defeat of the fossil-fuel industry’s propaganda campaign against President Obama, and his new found interest in climate change, just where does the US rank relative to its development of renewable energy?

Yes, the US has more installed renewable energy generating capacity than many other countries. But the US is also a large country and is one of the world’s most populous. Yet, relative to its population, the US is well behind in the development of its solar, wind, biogas, and geothermal energy compared to that in many other countries.

Solar

What prompted the following comparison of renewable energy development per capita, was the surprising announcement by Renewables International that the Czech Republic had reached the threshold of 2,000 MW of installed solar photovoltaic (solar PV) capacity. This development had been preceded earlier this year by the unexpected success of solar PV in Great Britain where 1,300 MW had been installed due to their wildly popular feed-in tariff. And then this week came reports that Australia, another unknown market for solar PV, had surpassed 2,000 MW of installed capacity.

These events call into question just what the renewable industry and, more importantly, what the American renewable trade press call a success.

Consider for example, the news from Australia. If estimates of installed capacity by mid-year are correct, Australia will have caught up with California in total installed solar PV and will substantially have surpassed California in solar PV installed per capita (0.8 kW per capita vs. 0.5 kW per capita). This is nothing short of remarkable.

A combination of conditions makes these events seem so unlikely. Australia is dominated by the fossil-fuel industry: the country is a major exporter of coal, mostly to Asia. Britain is notably cloudy, wet, and windy and the ruling conservative coalition has a penchant for fossil fuels and nuclear over renewables. And if one was to believe all the dire trade news, solar PV in the Czech Republic was dead–and buried.

In looking at selected markets for solar PV worldwide, the accomplishments of several countries stand out relative to the US. Most well known are Germany and Italy.

Up to mid-2012, Germany had installed 20 times more solar PV capacity per capita than the entire US; Italy had installed 14 times more per capita.

The solar industry in the US is on track to have its best year ever as huge new central-station solar power plants are coming on line. Analysts expect the US to install 3,500 MW of new solar PV this year. Even so, Germany will install twice as much at a fraction of the cost as the US, and Italy will install far more than the US on a population adjusted basis.

While Italy remains second fiddle to Germany in total installations worldwide, growth of new solar PV installations continued robustly with nearly 2,500 MW installed in the first half of 2012. If growth continues at this pace, Italy could install as much if not more solar PV capacity in absolute terms as the US this year.

Due to falling hardware prices, feed-in tariffs have been cut dramatically in the Czech Republic, Germany, Italy, Greece, and France. These countries all have substantial fleets of PV systems already in operation, and more capacity is continuing to be installed despite the lower tariffs.

The Czech Republic, the poster child for government reaction to stop a booming solar sector, has nine times more solar PV capacity than the US and, as noted, will exceed 2,000 MW of total installed capacity by the end of 2012.

Spain, similarly afflicted with a reactionary attempt to rein in massive solar PV development, still has five time more solar PV per capita as the US.

But, it’s the Australian market that has taken analysts by surprise. With its federal system, each state, as well as the capital territory have their own solar policy, making it difficult for the trade press to follow the pace of development.

The Australian solar boom has been powered by a mix of policies among the different states: feed-in tariffs, capital subsidies, and net metering. Some jurisdictions have used feed-in tariffs in combination with capital subsidies. No one should be surprised that a boom was the result.

The Czech Republic, Spain, Greece, and Australia all have installed more solar PV capacity per capita than the one-time green powerhouse of California.

New Jersey has installed almost twice as much solar PV capacity per capita as California. Despite New Jersey’s success, recent American press reports continue to label California as a “green leader”. Could regional bias be at work? What makes California “greener” than New Jersey in reference to solar PV?

And in the “great white north,” the province of Ontario, Canada has installed as much solar PV per capita as California after only a few short years of Ontario’s troubled feed-in tariff program.

Another unsung success story is solar PV in France, a country more associated with nuclear power than with solar energy. France has installed almost as much solar PV per capita as California. In 2012, France has nearly doubled total installed solar PV capacity from 1,500 MW to nearly 3,000 MW by mid-year. Is pro-nuclear France greener than anti-nuclear California?

Admittedly, new contracts have ground to a halt in France after the previous government of Nicolas Sarkozy effectively strangled new solar development. Despite President Sarkozy’s attempt to kill the solar industry, there is a substantial backlog of projects–more than 1,500 MW–that will come on line in the coming months. Thus, France will continue to rival California in solar PV capacity per capita well into 2013 and possibly beyond.

One of the most surprising successes has been Denmark. In less than one year, Denmark has installed nearly 100 MW of solar PV through a traditional subsidy program. The rapid growth of solar in Denmark has surprised everyone, including the Danes. While small in absolute terms, Denmark has leapt ahead of the US in solar PV per capita after only a few months even though the US has been developing solar energy for decades.

Last week Denmark’s minister of energy introduced new legislation that may extend solar PV development further. In what appears to be a net-generation feed-in tariff, the minister proposes that Denmark pay DKK 1.30 ($0.22 USD) per kWh for excess generation from solar PV systems less than 6 kW. The bulk of self-generation will offset the Danish retail price of electricity, the highest in Europe. This could extend Denmark’s solar boom.

Among the markets selected, the US leads only China in solar PV capacity per capita.

Wind

The US fares better in wind than in solar PV, but it still lags many countries particular the true leader in wind: Denmark.

When California faltered in the late 1980s after the first tax-credit driven “wind rush”, Denmark–and Northern Europe in general–picked up the mantle of leadership in wind energy development both in absolute terms and in capacity per capita.

Denmark operates nearly five times more wind capacity per capita than the US and a majority of that is owned by its own citizens.

Spain has installed more than three times as much wind capacity per capita as the US.

Installations per capita in France are behind those in the US. Nevertheless, wind in both countries face similar obstacles. As in the US, an unstable policy environment in France threatens continued growth of wind energy.

Wind was seen as a threat to incumbent state-generator Electricité de France (EDF), consequently former President Sarkozy place onerous new restrictions on wind development. Only 250 MW of new wind capacity was installed in France by mid-year, half of that typically installed.

The new government of Francois Hollande has yet to put their stamp on renewable energy policy and instead have deferred action until a “national debate” on energy is completed. If Hollande chooses a rapid development path, France could surpass the US in installed capacity per capita. If Hollande doesn’t take corrective action soon, France will likely miss its 2020 renewable targets.

Geothermal

Though the US has the most installed geothermal generating capacity in the world, it still substantially trails many countries in capacity per capita.

Iceland remains in a class by itself with nearly 200 times more geothermal capacity per capita than the US.

New Zealand, one of geothermal energy’s pioneers, remains a leader with 14 times more geothermal per capita than the US.

Biogas

Biogas remains the renewable energy technology most under appreciated in the US.

Industry analysts and renewable policy advocates alike often overlook biogas because the technology isn’t seen as “sexy” as solar PV or wind. Yet in Germany, biogas alone will generate more than 20 TWh this year. That’s as much as all of Germany’s famed solar PV produced in 2011.

With the exception of dairy farmers in New England and the Midwest, there has been very little development of biogas generation in the US compared to Europe in either absolute terms or in capacity per capita.

German farmers operate nearly 200 times more biogas capacity per capita as American farmers. Austria operates 60 times more biogas capacity per capita as the US.

In conclusion, the US lags many of its peers internationally in the development of renewable energy technologies.

While the boom in US solar PV installations in 2012 is good news for the American renewable industry, the development of geothermal and biogas remain stalled relative to the success seen in other countries. Worse, the failure of Congress to extend the federal tax-credit for wind energy has caused the market for wind in 2013 to collapse.

Rather than leading renewable energy development, the US is in danger of slipping further behind its peers.

As President-elect Obama weighs how best to tackle climate change in his second term, and as Congress grapples with the budget and “entitlements”, maybe now is the opportune time for the nation to consider sweeping revision of its renewable energy policies that go well beyond traditional tax subsidies and Renewable Portfolio Standards. It could well be the time for the US to consider a comprehensive suite of policies that have worked so well elsewhere.

These policies, for example, can be found in Germany’s Renewable Energy Sources Act. This law grants all renewable generators the right to connect to the grid, the right to be paid for their electricity, and–most importantly–spells out how much they will be paid and for how long.

Most of the jurisdictions leading in renewable energy development worldwide incorporate these principles within their renewable energy policy in one form or another. Maybe it is time for the US to do so as well.

-End-

This feed-in tariff news update is sponsored by the , An Environmental Trust, and the David Blittersdorf Family Foundation in cooperation with the Institute for Local Self-Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

With the first eight months of 2012 completed, it is an ideal time to evaluate the current state of the solar market and consider what might come next in this turbulent industry. At the core of this is one essential question: When will the solar market stabilize?

It is already clear that 2012 will most likely be a strong year for solar installations, with latest estimates ranging at a global installation level somewhere between 26 GW and 35 GW and most analysts settling for the midpoint of about 31 GW. This means that 2012 will again show significant growth of almost 20% over 2011’s level of 26 GW.

This level of growth in the market is quite phenomenal given the lack – or removal – of incentives across many geographies. However, it can be attributed to the reduction in system costs driven mostly by module price declines.

These prices have been sliding since the beginning of the year and have lost another 12% to 15%, which fundamentally confirms the second rule in PV: that falling module prices facilitate demand creation.

During the Intersolar conference in Munich in mid-June, the lowest prices quoted were at 0.52 euros/W ($0.66), with the average price hovering somewhere above $0.75/W. There is a risk that prices will fall further as the pull-forward effect of demand in Germany – due to the feed-in-tariff change – abates and the U.S. market further destabilizes because of the anti-dumping duties.

Will consolidation help to stabilize prices? It is clear that at today’s pricing level, few – if any – manufacturers in the industry are making money. This trend is well illustrated by the first-quarter results of major solar players, which showed significant losses.

The argument is that current price levels do not enable industry players to earn a margin that allows them to cover their production cost. Industry participants will not be able to sustain ongoing losses, and consequently, less-efficient players should drop out of the market, helping to clear overcapacity.

Today, almost 60% of capacity comes out of China, and consequently, Chinese companies will determine the future shape of the industry. Currently, there are more than 1,000 solar players in China – of which at least 50% have shut down production or partially ended production.

This has already resulted in some consolidation, best illustrated by the increase in market share exhibited by tier-one players, such as Suntech Power, Yingli and Trina, from 25% in the fourth quarter of 2011 to more than 60% by the end of the first quarter of 2012. However, even these industry leaders share too much capacity amongst themselves to help stabilize prices.

The 10 largest solar companies globally held a combined production capacity of 20.9 GW at the end of 2011, which represents 85% of the total installed capacity of 24.7 GW. First Solar, the only U.S. player, will actively take about 500 MW out of the market after shutting down its German facility.

Other players, such as Canadian Solar and Yingli, are unfazed by recent market developments and continue their expansion plans by adding 600 MW and 700 MW of new capacity, respectively. Hence, overall capacity of tier-one players is forecast to remain stable.

Chinese consolidation is likely to take much longer than expected, as provincial governments will be hesitant to let their local champions fall. However, some less-visible clearances of overcapacity are already taking place.

Industry research group Bloomberg New Energy Finance reckons that combining the various announcements and insolvencies that already took place might lead to about 20 GW off the market in the near future.

Manufacturing innovation
Can technology ease the pain? It is unclear whether current technological market developments will be sufficient to ease the pain in the solar sector. Despite the partial stabilization of prices and removal of some overcapacity from the market, current price levels do not allow companies to earn an adequate margin from cell and module manufacturing.

Most industry players are targeting a manufacturing cost of $0.75/Wp by the end of 2012. However, Canadian Solar is the major exception, claiming it can reach $0.60/Wp, down from $0.73 reported in the first quarter. If achieved, this would be a total reduction of 18%, half of which should come out of lower polysilicon/wafer input cost and the remainder from process and module redesign steps.

But even this significant cost reduction might not be sufficient, as prices most likely will continue to slide.

Consequently, the industry is focused on the question of whether there is sufficient innovation to bring production cost down further. Short-term cost reduction will come from incremental steps, such as tightly managing material input costs, further streamlining and automating processes, and small improvements to the manufacturing process (e.g., optimizing the amount of silver used in front- and back-contacting), rather than ground-breaking innovation.

There is potential that thinner wafers might help, with a claim from SunPower that it would be able to reach approximately $0.60/Wp by the fourth quarter of next year from this methodology.

Similar steps are being taken by German manufacturer SolarWorld, which is planning to invest 50 million euros in the coming months for the combination of new equipment, technology upgrades and process improvements for its cell manufacturing sites in Germany and the U.S.

In the past, more ground-breaking innovation was driven by joint collaborations of leading manufacturers and solar equipment players. However, given the current environment and difficult investment cycle equipment players are facing, it is doubtful that they will have the financial means to continue these joint research and development (R&D) efforts.

Financial results for the first six months of 2012 underscore the challenges the equipment players are currently facing. Applied Materials declared losses of $74 million for the first half of 2012, while centrotherm filed for insolvency and Meyer Burger Technology barely posted a profit.

For the bigger, more diversified players, like Applied Materials, there is a risk that they might pull out of solar altogether, as the sector’s current contribution to the company’s overall revenue has declined to less than 3%. Additionally, management may not view solar as worth the effort compared to its core activities in the semiconductor market and the myriad of other growth opportunities.

Not everything is bleak in the manufacturing equipment segment. GT Solar announced that it has developed new technology for polysilicon manufacturing that should allow for production cost of less than $14/kg. With current polysilicon spot prices at about $20/kg, this could open up room for a significant price decline of silicon, while at the same time, restoring margins of polysilicon suppliers.

It is clear that there is no short-term fix for the market difficulties of 2012. Similar to previous years, 2012 will be a year where market demand outstrips initial estimates and all players are jostling to get their share of the pie.

The road ahead
Previous experience has shown that markets always grow when prices continue to drop – hence the fierce price competition among industry participants. This will only change when markets start building at a more sustainable pace and governments start putting long-term policies in place. This will allow for some clear visibility instead of recurring quick fixes, as best illustrated by the ongoing revision of the German feed-in-tariff system.

For 2013, it is expected that there will be a significant shift in end markets, as Germany is expected to drop down to 3.5 GW or less of installations, and other European markets are also likely to shrink. Industry analysts believe that China will eclipse Germany as the single biggest market in 2013.

It is yet unclear whether the U.S., Japan and India, as well as selected smaller markets in Latin America, will be able to fill in the demand gap. Although solar development in the U.S. market could hinge on the outcome of the presidential election and the fate of other energy resources, such as shale gas, most other markets have a tendency to prefer local industry players, thus presenting a risk of severe market distortion.

Ultimately, the maturity of the solar sector will be a long and drawn-out process. It will be a combination of a number of factors, including more long-term and cautious market development by governments, ongoing consolidation of the industry, with some players falling out, and continued innovation to lower manufacturing costs.

For industry participants, that will mean a paradigm shift from “it’s all about growth and getting market share” to developing a sustainable business with focus on cost and capacity, retaining a technological lead and developing a clear view on which markets to serve.
Chaim Lubin is vice president and a member of the electronics and renewable energy group at global investment bank Lincoln International. He can be contacted at clubin@lincolninternational.com. Martina Ecker is managing director and head of technology and renewables at Lincoln International. She can be contacted at m.ecker@lincolninternational.de.

Photovoltaic planning is said to be difficult in such an unpredictable market.

Conergy AG

The importance of subsidies has been underlined in a new report – Navigant Analysis of Worldwide Markets for Solar products and Five-Year Application Forecast 2011/2012 – issued by Navigant Research. The company says the compound annual growth rate of grid-connected photovoltaics between 2006 and 2011 of 69% was driven “entirely” by feed-in tariff programs.

However, since these are undergoing many changes, particularly in the German and Italian markets, photovoltaics has become a less profitable investment prospect and instable. As such, “strong growth going forward should not be assumed. Nor,” write authors Paula Mints and Jessica Donnell, “can the solar industry be considered mature, at which slower growth is normal.”

They go on to say that without incentives, grid connected photovoltaics cannot profitably grow. “Without support, and likely even with it, prices will be artificially low, and there will be little incentive,” they add.

In addition to affecting margins and causing bankruptcies, Mints and Donnell say decreasing photovoltaic prices have led to both low quality products and system designs. Without continued support, they underline the fact that cost cutting operations will continue, in areas like installation. “Cutting costs in this regard will lead to substandard installations along with mind-share damage to a young industry that can ill afford it,” they state.

They continue, “Some manufacturers have chosen to truncate the pilot scale phase and have rushed technology into commercial deployment before it is ready. Unlike software, which is always in beta, a solar system should not work out its bugs in the field.”

Regarding grid parity, the authors say the solar industry has “ignored the realities of technology development” including R&D, pilot production and repetition. “The assumption has been that solar will reach grid parity without subsidies with conventional energy sources. As conventional energy will likely continue to receive subsidies this cannot be reasonably considered fair competition.”

Planning is also said to be difficult in such an unpredictable market, “with little transparency and much obfuscation.” With photovoltaic module supply continuing to outstrip demand, and sustained high inventories it is very difficult to obtain an accurate market picture, say Mints and Donnell. To ensure growth, they believe financing mechanisms are needed.

In addition to analyzing the global photovoltaic market, Navigant also provided growth forecasts for the installation of photovoltaics (in MWs) – taking into account the amount of shipped and installed modules in a calendar year – based on 3 scenarios: reduced incentives (RI); conservative (cons.); and accelerated (acc.). See the table below for an overview.

New figures have revealed that new global photovoltaic installations surpassed 13 GW in the first six months of 2012. In 2H almost 18 GW is expected to be added. For the FY, Germany, China and the U.S. will be the leading markets, while Italy will fall into fourth place.

In its latest quarterly report, IMS Research has found that over 13 GW of new photovoltaic capacity has been added in 1H 2012, thus representing growth of 35% over 2011. Leading this development is said to be Germany and the Americas.

Despite the growth seen in Germany, the U.K.-based company believes demand in Europe will shrink by almost 3 GW in 2012, compared to the previous year, while China and the U.S. will be responsible for adding most new capacity.

Specifically, the U.S. is predicted to become the third biggest market in 2012, accounting for 40% of new installations, and increasing cumulative installed capacity to 3.5 GW. “The longer-term outlook for this market is less certain, although the speed at which it is developing so far in 2012 provides some encouragement,” stated PV research director, Ash Sharma.

This means Italy, which was the biggest photovoltaic market in 2011 in terms of newly installed capacity and which knocked Germany off its top spot for the first time, will fall to fourth place, Sharma told pv magazine. As such, he says the top 3 markets in 2012 will be Germany, China and the U.S.

The Americas market, comprised of South and North America, is said to have already added 1.7 GW of new photovoltaic capacity this year, thus representing annual growth of 120%. It is predicted to end 2012 with 4.3 GW of new installations. Sharma continued, “The Americas market, led by the USA was unseasonably strong in the first half and did not show any significant slowdown resulting from the anti-dumping duties.”

“Despite the lackluster financial performance of the industry’s suppliers, underlying demand was robust in the first six months of this year, with first half installations 35 percent up on 2011,” said Sharma.

IMS Research concluded, “Global demand is predicted to accelerate in the second half of 2012, despite the slowing of key European markets, Germany and Italy … driven by markets such as China and Japan, as well as the Americas. China recently approved 1.7 GW of Golden Sun projects which must be completed by the end of the year, whilst Japan’s new FIT became effective on 1st July and will help spark a surge in demand towards the end of 2012.”